Tributes have been paid to the “dedicated” social justice campaigner Camila Batmanghelidjh who has died aged 61.

Ms Batmanghelidjh, an Iranian-born social justice campaigner, founded Kids Company in 1996 to support vulnerable children and young people in London and Bristol.

In a statement on Tuesday, Ms Batmanghelidjh’s family said she died peacefully in her sleep on Monday after a period of “failing health”, describing her as an “endless source of inspiration” who “dedicated her life to advocating for Britain’s most vulnerable children”.

Her charity attracted several celebrity backers including former prime minister David Cameron, Coldplay, artist Damien Hirst and comedian Michael McIntyre – and Ms Batmanghelidjh was made a CBE for her work.

But it was wound up in 2015 after police launched an investigation, which was dropped seven months later, into unfounded allegations of abuse and exploitation, following the broadcast of a BBC Newsnight report.

In 2021, a bid to ban Ms Batmanghelidjh and seven ex-trustees from being company directors was rejected by a High Court judge, who commended her “enormous dedication” to young people.

In 2022, the Charity Commission later published a report concluding that the charity had been mismanaged, claiming it operated a “high-risk business model”.

For all those around her, and especially for her family, she was an endless source of inspiration, a fountain of wit, and a kaleidoscope of colour

Later that year, Ms Batmanghelidjh won a High Court bid to pursue a judicial review of the report.

Ms Batmanghelidjh’s family said she died “peacefully in her sleep” on New Year’s Day after celebrating her birthday with her loved ones.

The statement said: “Working alongside her devoted colleagues and dedicated volunteers, Camila changed the lives of tens of thousands of children and young people in London, Bristol and Liverpool otherwise neglected by a failing child protection system.

“She showed these children that they were worthy of love and support.

“For all those around her, and especially for her family, she was an endless source of inspiration, a fountain of wit, and a kaleidoscope of colour.

“Camila’s family hopes that her memory will inspire others to consider how they might protect and uplift vulnerable children.”

In her 2021 High Court judgment, Mrs Justice Falk described Ms Batmanghelidjh and seven Kids Company trustees as “highly impressive and dedicated individuals who selflessly gave enormous amounts of their time to what was clearly a highly challenging trusteeship”.

Speaking after the hearing, Ms Batmanghelidj said she hoped the ruling would be the “first step in refuting the many lies that have been told and banishing the false myths”.

She described the Charity Commission’s report the following year as a “corrupted attempt” to “justify its mistaken decision to conduct an investigation in the first place”, later winning a bid to challenge the watchdog’s findings at court.

But, in an obituary on her website, her family said Ms Batmanghelidj’s health declined as she was engaged in “legal battles”, explaining that a condition in her childhood had left her immunocompromised.

It said that, since the pandemic, she had left her flat in North London on “only a few occasions” to receive treatment for recurring infection.

The obituary concluded: “Until her death, she continued to work with vulnerable children, who called her or visited her to discuss their traumas, their insecurities, and their challenges.

“Camila wanted to honour these children with the care and protection they deserved.”